Sam Bankman-Fried Says He ‘Didn’t Knowingly’ Spend Customer Funds, Calls Billion-Dollar FTX Collapse ‘Pretty Embarassing’

FTX founder Sam Bankman-Fried is admitting fault for the collapse of the crypto exchange weeks after the firm filed for bankruptcy.

Speaking during the New York Times DealBook Summit on Wednesday, the 30-year-old co-founder and ex-CEO says he is to blame for the downfall of the company.

“I screwed up. I was a CEO of FTX and I say this again and again, that means I had a responsibility, that means that I was responsible ultimately for us to do the right things, and I didn’t, we messed up big.”

FTX currently has $8.9 billion in liabilities, leaving customers unable to fulfill withdrawal requests. In its bankruptcy filing, the company says it owes more than $3.1 billion to its 50 largest creditors.

Bankman-Fried goes on to say that he is deeply sorry for what happened, saying that his team was too distracted by having to comply with regulatory requirements to focus on risk management.

“We were spending an enormous amount of our energy on compliance. We were spending an enormous amount of energy on regulation, on licensure. We’re getting licensed in dozens of jurisdictions. I think, frankly, we’re spending probably too much of our energy getting licensed in retrospect…

I think that a lot of what we ended up doing and focusing on was a distraction to some extent from one unbelievably important area that we completely failed on and that was risk. That was risk management, that was customer position risk and frankly, conflict of interest risk and there was no person who was chiefly in charge of positional risk of customers on FTX, and that feels pretty embarrassing in retrospect.”

Bankman-Fried is accused of mishandling billions of dollars worth of customer funds by allegedly loaning them out to Alameda Research, FTX’s trading branch. However, the former billionaire says he didn’t knowingly co-mingle any funds.

“I didn’t knowingly co-mingle funds, one piece of this [is] margin trading, you have customers borrowing from each other [and] Alameda is one of those I’m quite frankly surprised by how big [its] position was, which points to another of failure of oversight on my part.”

 

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